Credit score is numeric rating of your past credit history and it is maintained by three agencies Experian, Equifax and Callcredit in the UK. All these have their own criteria for ratings but one thing is common that if you have outstanding credit in your name rating will go down.
Why Credit Score is so important?
Credit Ratings are now considered as your financial status, so it plays a vital role for every part of life. For example your loan or credit card application, gas or electric connection application, rented house agreement or even in the getting employment, you will face many problems with poor or bad credit history. Many lenders refuse to fund a person with poor credit history and if some lenders agree to lend they may charge higher interest rates.
How to manage good credit score?
First of all you should check your credit score from time to time, which is available online and free of charge. This will help you to know the latest place so that you can take corrective measures if required.
If you find that your score is poor then you may take these steps to improve it.
1. Establish your identity by registering in electoral roll if not in list till now. You can do this online as well.
2. Close your old credit accounts which are not in use now.
3. Try to distribute credit card bill in all credit card you have. Agency will consider percentage of credit card used limit for credit score calculation. For example if credit card limit is 1000 pounds and you have used 500 pounds then it will show 50% uses and if you have other credit card then pass some amount to repay this card balance.
4. If you have different types of small loans with many lenders then try pay these loans by taking a single personal loan.
5. Try to pay bills on time.
6. Avoid to take loan which is out of reach of monthly savings to repay it.
7. Frequent house change also adversely affect your credibility in front of lenders.
8. Short term loans like payday or text loans are costly affairs so do not use them as regular practice
9. Keep loan amount well within reach and repay it timely otherwise this will hit hard to credit score and cause you financial losses also.
10. If you feel inability in loan repayment then tell your lender well in advance so that he may rearrange your loan. If you become loan defaulter without informing lender then he may take help of third-party recovery agents and this other charges will also be extra burden on you.